Disney upsets theater owners with plans for early release of 'Alice in Wonderland' DVDs

by Claudia Eller, Dawn C. Chmielewski and Richard Verrier

LOS ANGELES — In a move that begins to redraw the way movies are distributed, the Walt Disney Co. plans to release the film “Alice In Wonderland” on DVD only three months after it opens in theaters March 5.

The decision signals a big shift in strategy for Disney, which until now has resisted tampering with the traditional four-month period between a movie’s theatrical release and its availability in the home. Some theater operators, who worry that pushing up the date of DVD releases will dissuade people from watching movies on the big screen, fear that Disney’s action could snowball and become standard industry practice.

The chief executive of one regional circuit in Knoxville, Tenn., said he would yank “Alice” off screens as soon as it reaches DVD.

“I speak for myself and other exhibitors when I say we don’t like it,” said Phil Zacheretti, chief executive of Phoenix Big Cinemas Management, which operates 170 screens in 13 states. “It encourages people to wait for the DVD to come out. Three months is way too early on any film, much less what’s being touted as a potential blockbuster.”

Exhibitors, which split box-office revenue with the studios, generate higher profits the longer they can keep a movie in theaters.

Disney Chief Executive Bob Iger has championed a change in movie release patterns to address the changing habits of consumers, who want to see movies on their big-screen TVs or portable devices without waiting months for the DVD.

The decline of DVD sales, exacerbated by the recession, prompted Iger to renew the call to speed up a film’s release to the home.

Until now, Iger has not made the move — despite raising the idea five years ago — because of resistance from theater owners.

Exhibitors have admonished other studios that have shortened release windows.

In November, major theater chains yanked Sony Pictures’ family animated comedy “Cloudy With a Chance of Meatballs” after the studio announced it would release the movie to owners of its Internet-connected TVs a month before its DVD release. Similarly, Paramount Pictures raised the ire of exhibitors when it released its summer blockbuster “G.I. Joe: The Rise of the Cobra” on DVD slightly less than three months after its theatrical debut.

Since those flare-ups, however, major theater owners have acknowledged that they need to adapt to a changing market.

Exhibitors have been meeting with studio executives for months, agreeing to be more flexible about their period of exclusivity, as long as it doesn’t lead to a wholesale collapse of so-called release windows.

Walt Disney Studios Distribution President Bob Chapek and distribution executive Chuck Viane have been meeting with major theater chains to explain Disney’s reasons for accelerating DVD releases, which they say will be limited to a couple of movies annually.

But Iger’s pointed remarks Tuesday about “windows” during an earnings call with analysts roiled exhibitors, according to people familiar with the matter. He signaled Disney’s plans to begin compressing the release time to maximize DVD revenue, which long has propped up profits for the movie business.

Chapek offered a similar explanation Thursday.

“It is important for us to maintain a healthy business on the exhibition side and a healthy business on the home video side,” Chapek said. “We remain committed to theatrical windows, with the need for exceptions to accommodate a shortened time frame on a case-by-case basis.”

Disney said its decision does not auger a broader policy shift, presenting it as one that mutually benefits Disney and exhibitors.

In order to make and release an expensive 3-D film such as director Tim Burton’s “Alice in Wonderland,” starring Johnny Depp, the studio is seeking to maximize DVD sales to help recover costs. Disney wants to release the discs in early June, while the movie is still fresh in consumers’ minds, rather than at the height of the summer season when DVD sales fall off.

Tony Kerasotes, chief executive of Kerasotes Showplace Theatres in Chicago and chairman of the National Assn. of Theatre Owners, said most exhibitors would probably support Disney’s decision, as long as the early release of “Alice” was an exception to the traditional release window and not the rule.

“The income that studios get through DVD sales has been seriously depleted, and we’re generally supportive of some experimentation on a limited basis to see if they can improve their revenue,” Kerasotes said.

The Disney news was met with less than an enthusiastic reception in Britain, where two major chains, Odeon and Vue, pulled the “Alice” film trailer and refused to sell advance tickets. Viane met with overseas exhibitors to explain that Disney wanted to avoid competing with the World Cup soccer tournament, which begins June 11 in South Africa.